Private sector and Sustainable industries
Private sector development plays a key role in creating economic growth, employment and improved living conditions.
It enables governments in developing countries to generate increased tax revenues, thereby contributing to the funding of wider development strategies, and encourages entrepreneurship and diversification of the economy.
It also incentivises people to invest in education and skills acquisition and improves people’s lives through increased access to goods and services - including basic ones such as clean water, sanitation and energy.
Fostering a structured dialogue between European and partner countries to boost sustainable investment, we support governments’ efforts aimed at developing the private sector, with a particular focus on micro, small and medium-sized enterprises (MSMEs).
In 2017 we adopted the EU External Investment Plan (EIP), a €4.5 billion initiative encouraging private investment for sustainable development projects through bank guarantees, technical assistance and expertise.
The EU budget 2014-2020 (Multiannual Financial Framework) contained approx. €2 billion for private sector development. This, combined with development assistance from the EU countries, makes the EU a key player in supporting local private sector development in partner countries.
With our investment, we aim to:
- improve access to finance and financial inclusion (microfinance) for enterprises
- engage the private sector in the fight against poverty and support its role as a provider of goods and services, a driver of job creation and a generator of public revenues
- help the private sector to contribute to an economically, socially and environmentally sustainable development
Private sector engagement
Part of our approach is to find new ways to harness the potential of the private sector as a financing partner, implementing agent, advisor or intermediary.
Policy forums particularly contribute to these efforts:
- Policy Forum on Development (PFD)
Created in 2012, the Policy Forum on Development (PFD) is the result of a structured dialogue which brings together civil society organisations (CSOs) and local authorities (LAs) from the EU and partner countries with EU institutions and bodies.
- EU-Africa Business Forum
The EU-Africa Business Forum (EABF) is central to the Joint Africa-EU Strategy.
Providing opportunities for high-level dialogue and networking on issues pertaining to both continents, it brings together African and European business leaders from a range of organisations to discuss how to improve the business and investment climate between Africa and the EU.
The private sector has also been involved more systematically in relation to trade and productive capacity needs: by product, by sector and by value chain, throughout the whole life cycle of Aid for Trade interventions.
Access to finance and business development
Business development services (BDS) play a key role in private sector development.
Provided by public and private suppliers, they cover a wide range of non-financial services such as training and technical assistance, advisory services (e.g. to draft business plans), infrastructure services etc.
These services help micro, small and medium-sized enterprises (MSMEs) in developing countries to run their business more profitably, allowing the private sector to become a more effective driver of socially-inclusive development.
Business development services can both enhance an MSME's capacity to access finance and enable it to make more effective use of the finance once it is received. They can also be part of cooperation programmes focusing on the competitiveness of MSME. Therefore, business development services and access to finance go hand in hand.
Sustainable and responsible industries
The private sector has the potential to create conditions that enable inclusive and sustainable economic growth. Through our engagement efforts in the private sector, we encourage businesses to invest more responsibly by enhancing market rewards for corporate social and environmental responsibility actions.
We aim to ensure that consumption in the EU does not undermine human rights, labour rights, environmental protection or economic opportunity in countries involved along the supply chain.
Our initiatives include:
- SWITCH Asia which supports sustainable consumption and production for inclusive and sustainable growth, contributing to economic prosperity, poverty reduction and the green economy in Asia and Central Asia
- AL-INVEST through which we support the development of productive capacities and entrepreneurship in Latin America’s MSMEs
- GSP+, which removes tariffs on goods from low to middle income countries that implement international conventions related to human rights, environmental protection and good governance
- establishing a European Chamber of Commerce in 6 West African countries to identify obstacles to business development and to improve trade with the region