Stronger economies

Private sector

The private sector is crucial to meeting the Millennium Development Goals. Businesses are an engine of growth and development, and can have a potentially huge impact on improving the lives of people in developing countries through increasing investment, creating jobs, and developing products and services, technologies and innovations which can generate growth making people’s lives better.

The Business Call to Action is the focal point for mobilising the expertise and efforts of big business to support growth in developing countries and contribute to the MDGs.

Opening Africa for business

Businesses keen to invest in developing countries can be put off by potential risks to their investments caused by red tape, poor legal systems and other barriers to business operations. DFID is supporting business by working to overcome these hurdles in order to create a more business-friendly environment – helping keep costs down and creating more freedom to operate.

DFID actively supports the Investment Climate Facility, which aims “to make Africa a better place to do business”. African governments, donors and large private companies have come together to make improvements in those areas which affect business growth, such as property and intellectual property rights, customs procedures, commercial justice, and investment in infrastructure and energy. DFID is encouraging international companies to take part in initiatives like this by offering corporate members a leading role in major programmes and making sure that initiatives are pro-active, accountable and results-driven.

Developing innovative investments

Our Challenge Funds offer grants to businesses, on a competitive basis, to help cover part of the cost of getting new commercial ventures going – ventures that might not get going without help. We’ve designed them to stimulate business activities that particularly benefit the poor, but which are commercially viable and capable of expansion. Examples include the Food Retail Industry Challenge Fund and the US $50 million Africa Enterprise Challenge Fund, which build on the successes of our previous Challenge Funds.

Providing funding schemes

DFID is also providing international funds for schemes financed jointly with other donors, which aim to help countries adapt to climate change, and that encourage business to develop vaccines vital for the developing world. A range of international facilities are available that encourage businesses to invest in infrastructure in developing countries, and to streamline the investment process. Infrastructure projects require large investment on the part of business. DFID is funding a number of such facilities, like the Private Infrastructure Development Group, to lessen the risk of investment in this area.

DFID has also initiated in March 2008 the International Growth Centre (IGC), to which it committed £37 million over a three years period. The IGC aims to deliver world-class research and demand-led analytical and policy support to developing countries on growth.

Responsibility

While we regard business as a critical partner in development, companies cannot help to achieve the Millennium Development Goals while their operations have negative impacts on social and human rights or the environment. DFID therefore expects companies to show leadership in corporate responsibility, managing the social, environmental and economic risks in their areas of operation. Research shows that companies that manage their business risks, by adhering to high standards of corporate social responsibility, tend to perform better in the long run.

DFID has committed itself to support and promote responsible business standards by increasing its support and contributions to several schemes such as the Ethical Trading Initiative (ETI), the UN Global Compact and the OECD Guidelines for Multinational Enterprises.

Alongside the ETI, DFID is working with the garment and textile industry’s Multi-Fibre Arrangement Forum (MFA). Together, these bodies bring garment exporters, trade unions, government agencies, non-governmental organisations, and international buyers together in order to boost productivity and improve workers’ conditions.

DFID is also providing seed funding to support the establishment of an Institute on Business and Human Rights. Supported by a wide range of international stakeholders, including governments, businesses, the UN Global Compact and NGOs, its purpose is to be a source of global expertise in the area of business and human rights.

Links

• Private sector development strategy (2,063kb)
• Working with business (812kb)
• Business Call to Action
• Business fights poverty
• Research4development - Growth
• Product development public private partnerships
• How Vietnam's Private Sector Boomed without Legal Protection. (688kb)
• Incentives for Private Sector Development of an AIDS Vaccine. (147kb)