What is PSD?

Why PSD?

Pillars of Entrepreneurship

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In the report “Unleashing Entrepreneurship: Making Business Work for the Poor” private sector development is described as: “…lifting the barriers and creating the capacity for a market-oriented business ecosystem, one that operates efficiently and generates economic growth.”

In a recent E-discussion on the UN/UNDP role in Private Sector development [hyperlink to e-discussion], UNDP staff categorized PSD into 5 types of interventions/approaches:

• Market opportunity driven – providing goods and services to the poor through the market (e.g., “bottom of the pyramid” activities undertaken by companies for profit)
• Strengthening of market institutions that serve poorer segments of society (e.g. microfinance institutions)
• Creating market systems and financial value chains (e.g., new business clusters, including informal enterprises*)
• Enhancing regulatory environments (rule of law, governance, accountability, transparency)
• Directly leveraging and engaging the private sector to solve specific development issues, such as provision of basic services (including water, heath, education and energy)

PSD activities, as defined by other multilateral and bilateral players, can include some or all of the following:

• Facilitating the direct involvement of private sector in non-traditional sectors, e.g., in basic services
• Strengthening institutions and developing regulatory frameworks that support domestic PSD
• Reforming the business environment and legal context faced by businesses, including micro-enterprises and small and medium enterprises (SMEs)
• Improving capacities and business skills of private sector actors, such as through improving the provision of business development services
• Improving access to finance for businesses, particularly micro-enterprises and SMEs

Note that, while PSD is the objective, there may be a number of ways to achieve it. These include:

• Public Private Partnerships (PPPs), which are one among many processes to achieve PSD
• Corporate Social Responsibility (CSR), which is a business philosophy and tool that provides corporations with an opportunity to assist countries in domestic PSD

*cf. the High-Level Commission on Legal Empowerment of the Poor