Private sector strategy

UNDP’s Private Sector Strategy “Promoting Inclusive Market Development” from 2007 provides a framework for UNDP private sector interventions at global, regional and country office levels.

The strategy comprises the following five strategic areas (click on the links to learn more about each area or scroll down):

• Policy and institutional infrastructure: Provision of policy advice and capacity-building that help governments create an enabling regulatory climate for private enterprises;
• Pro-poor value chain integration: Integration of local producers with domestic and global value chains;
• Pro-poor goods and services: Facilitation of private sector investments in affordable goods and services for the poor;
• Entrepreneurship development: Promotion of small-scale entrepreneurship; and
• Corporate Social Responsibility (CSR): CSR in support of Inclusive Market Development and the Millennium Development Goals.

Policy and Institutional Infrastructure

Focus Area

In many UNDP programme countries, policies to support the development of inclusive markets are weak or non-existent. with the result that markets reinforce existing inequalities and patterns of social exclusion. For this reason it is crucial that governments carefully integrate targeted policies into national policy frameworks to ensure that the expansion of private sector activities contribute not only to aggregate economic growth, but also to enhanced employment and consumption opportunities for the poor.

Addressing these problems requires a commitment from governments and donors to work together with the private sector to promote employment-intensive growth and stimulate new markets for affordable goods and services at the ‘base of the pyramid.’ This entails not only policy reforms, new policies and more inclusive policy-making processes, but also greater emphasis on capacity building to better support market institutions. 

UNDP's Role

UNDP is committed to working in partnership with other UN agencies and international development organizations to achieve these objectives. We are actively promoting policy coherence on inclusive markets through cooperation with specialized UN agencies and the Donor Committee for Enterprise Development (DCED). Priorities include sectoral policies to promote employment led growth, private sector development in post-conflict environments, capacity-building support for effective legal and market regulatory institutions and targeted support to strengthen the voice of poor entrepreneurs and producers in national policy reform processes. We will also continue to advocate for policies, institutions and mechanisms that facilitate the empowerment of women entrepreneurs.

Pro-poor Value Chain Integration

Focus Area

In an increasingly globalized and competitive economy, integrating poor smallholder producers and entrepreneurs into local and global value chains is increasingly recognized as an effective tool for poverty reduction. UNDP helps develop value chains in market sectors that offer the prospect of sustainable growth and transition to higher valued added and better remunerated forms of employment for poor communities. Priority is given to labor intensive commodities, products and services.

UNDP's Role

UNDP's Inclusive Market Development (IMD) approach facilitates business-led solutions to poverty in advancement of the Millennium Development Goals. By first defining the needs on the ground in consultation with government, civil society and private sector agents, UNDP works at improving the competitiveness of key value chains where large numbers of the poor are active as producers, consumers and wage-earners.

Approximately half of all projects in the current private sector portfolio are value chain related and work with lead firms (buyers, retailers, traders, input suppliers) to promote demand-driven investments that benefit producers, often through contract farming schemes or other local sourcing arrangements.

Pro-poor Goods and Services

Focus Area

One key aspect of inclusive markets is their ability to increase access to important goods and services that contribute to the reduction of poverty. In most UNDP programme countries, the poor are in need of improved access to a wide range of vital goods and services such as water, sanitation, energy, telecommunications, transportation, financial services, basic construction materials, health and hygiene products, etc.

UNDP's Role

Working alongside the UN specialized agencies, other developing partners, and the private sector, UNDP is promoting and facilitating investment opportunities to meet the unmet needs of vital services for the poor and the disadvantaged. 

UNDP’s activities in this focus area emphasize:

• Raising awareness, advocating viable business models and providing information on how businesses, governments and civil society can create opportunities through market-based approaches. UNDP’s flagship initiatives in this area are Growing Inclusive Market (GIM) and Business Call to Action (BCtA).
• Enhancing access to basic goods and services including financial products by the poor by exploring and brokering sustainable business models in partnerships with the private sector as well as public private partnerships. Most of this work is done at the country level through our Inclusive Market Development (IMD) approach.

Entrepreneurship Development

Focus Area

Sound policies and robust institutions are vital but not sufficient in the development of inclusive markets. The poor need to be able to take advantage of new business opportunities and become empowered active economic agents that benefit from overall economic growth. Since foreign direct investment alone will not generate sufficient new jobs to make a significant mark on existing poverty levels, entrepreneurship development is an important part of any strategy for inclusive growth.

UNDP's Role

Fostering entrepreneurship is an important element in many of UNDP's Inclusive Market Development (IMD) programmes/projects. UNDP fosters entrepreneurship development together with UN specialized agencies, governments, civil society, business associations and private sector actors in programme countries that demonstrate a commitment to business environment reforms and the development of inclusive markets. Typically, this involves the establishment of sustainable institutions for the continuous provision of entrepreneurship development and education to the poor and other marginalized groups. Most value chain projects have entrepreneurship development as an important project component.

Corporate Social Responsibility

Focus Area

Corporate Social Responsibility (CSR) has emerged as a significant issue in the global business community and is now viewed as a central consideration in the way many companies conduct their business. Stakeholders such as investors, consumers, communities, employees and government officials are increasingly demanding that companies behave responsibly and look at how their positive impact on society can be maximized. UNDP views CSR as a spectrum of business activities ranging from philanthropy on one end via strategic social investments to how business processes can become more sustainable and contribute more effectively to equitable development.

UNDP's Role

UNDP’s work on CSR includes supporting multi-stakeholder activities with companies of all sizes, from multinational corporations to local indigenous enterprises, to develop accelerated solutions for achieving the Millennium Development Goals (MDGs). UNDP’s work can typically be clustered into two main types: i) engaging the private sector in policy dialogue around development priorities and CSR issues; and ii) engaging the private sector in concrete partnership projects in support of development priorities.

As part of its efforts to advocate for CSR practices and engage the private sector in policy dialogue, UNDP plays a lead role in the UN Global Compact, which today is the largest CSR initiative in the world. UNDP facilitates Global Compact networks in more than 40 developing countries and countries with economies in transition. These are voluntary networks that bring together businesses, civil society organizations, labour and academia to discuss human rights, labour standards, environment and anti-corruption and to take collective action in these areas through public private partnerships.

UNDP has also engaged in more than 100 partnerships with the private sector. For example, UNDP has worked with Coca Cola and the UN Foundation to support rehabilitation of water and sanitation systems in Tsunami affected countries. In Angola UNDP works with ChevronTexaco to promote small enterprise development. In China Arcelor Mittal, the world’s largest steel company, works with UNDP on a range of environment and energy efficiency issues.