The private sector is the main driver of growth and employment creation. Private sector actors are responsible for approximately 90% of jobs in developing countries. IDG uses a market-systems approach. A market-systems approach is one that recognizes the intertwined linkages in the public and private sectors among the 5Rs (resources, roles, relationships, rules, and results). The market-systems approach seeks to understand how a market functions by identifying the root causes limiting economic diversification and linkages to regional value chains (RVCs) and global value chains (GVCs). The approach also identifies the characteristics constraining target groups (female-owned businesses, SMEs, youth, domestic investors) competitiveness. A significant impediment facing SMEs is the difficulty associated with expanding their market reach beyond their own country—assistance that help firms with export-oriented development can be particularly impactful.
IDG’s approach to private-sector development generally would start by using metrics like Revealed Comparative Advantage (RCA) and the more rigorous and innovative “Theoretical RCA” as a first step in identifying promising subsectors, supplemented by consideration of market system networks, donor and country economic growth priorities, and opportunities for diversification and increasing productivity. PSD activities could focus on some of the following topics: registering and meeting formal tax and regulatory and standards requirements; lack of commercial business consultancy and advisory services; access to key commercial and technical information that would enable more effective competition; access to finance and financial services (including assistance to Development Finance Corporation investment transactions); access to markets; weak marketing and product development; high transport costs (especially for rural and agri-based activities); and weak workforce development. We place an emphasis on business service providers (BSPs) and strengthening their capacity to develop and provide services on a sustainable fee basis, while transferring know-how and skills to their SME clientele. We work to reduce trade and transaction costs, create opportunities for business service providers, including targeted training, and share good practice lessons on knowledge platforms, and in outreach events. We work with a wide range of private sector advocacy organizations, and business associations to build participatory support for improved competitiveness and innovation.
Private-sector development obviously needs to go hand-in-hand with private-sector engagement. The private sector needs to be a full partner in IDG activities to support the sector.
To promote the development of the private sector in Bangladesh and encourage economic growth, the Feed the Future Bangladesh Trade Activity is working in two key areas: trade facilitation and improving the business enabling environment. IDG is working with public agencies and private sector stakeholders to draw on best practices and regional experiences to build support for activities that simplify documentary requirements, streamline and strengthen rules and procedures for imports and exports, bolster technical capacity across border agencies, modernize processes through digitization and ICT, and advance stakeholder dialogue and inter-agency coordination by identifying and mitigating political economy constraints.
The Albania Support for Private Sector (SPS) Activity facilitated sustainable economic growth in Albania through initiatives aimed at enhancing private sector competitiveness and improving access to finance. SPS investments totaled $2,338,000 into 21 SMEs, which surpassed the original target of $800,000. These investments focused on the expanding production facilities within the agriculture and wood industries, thus increasing the competitiveness of their respective value chains.
SPS worked to improve the Agriculture and Rural Development Agency’s capacity to evaluate grant applications from agribusinesses for EU Instrument for Pre-Accession Assistance in Rural Development (IPARD) funding. It also bolstered the agency’s staff proficiency in preparing for accreditation under the EU IPARD’s program.
The Tunisia Information and Communication Technology (ICT) Competitiveness Project focused partly on stimulating ICT entrepreneurship and company development through:
Of the 83 enterprises and groups assisted by the USAID Project team, 45 were ICT firms and the remaining firms were 38 “ICT-enabled firms” operating in sectors such as apparel and textiles, specialty foods, and manufacturing. Technical assistance included strategic/business planning, market development, production planning, quality control, and financial management. Training covered soft skills and technical skills, mainly for newly recruiting staff.
The goal of the project was opening private sector opportunities to the general population and to increase employment and output through the development of small and medium enterprises. This was done through analyzing the Small and Medium Enterprise (SME) Program in Morocco and an established educational resource for SME development through franchising. Specifically, IDG assisted the CEM in identifying existing Moroccan businesses with the potential and the resources to be packaged as franchises; assisted the CEM and American Chamber of Commerce in Casablanca with identifying potential Moroccan licensees with interest in contracting with American franchisors; identified and negotiated contracts with US and South African franchises that were interested in expanding to Morocco; designed and implemented a franchising training program and one-day workshop for Moroccan businessmen; designed a curriculum for a follow-up training program.
The Tripoli Special Economic Zone (TSEZ) Project entailed drafting a feasibility study and master plan for a Special Economic Zone in Lebanon’s northern city of Tripoli, with the intent of facilitating job creation in an important part of the country outside the capital city. The TSEZ seeks to reduce barriers to doing business and to enhance collaborative opportunities for investment and export-led growth. Phase 1 of the project focused on assessing the barriers to doing business in Lebanon, analyzing trade and investment flows to gauge market trends, and estimating the amount of investment likely to flow into the proposed Tripoli Special Economic Zone (TSEZ). IDG also identified public-private partnership scenarios that would allow the government of Lebanon to attract investment from private developers to construct and operate the zone, using financial analysis to determine required internal rates of return (IRR).
The Tropical Produce Support Project in the West Indies is a project which focused partly on strengthening the West Indies private sector development by providing technical assistance to improve the production, post-harvest handling, transport, and marketing of non-traditional agriculture
IDG worked as a subcontractor to train Jamaican SMEs to compete in the global market. The project addressed regulatory reform, by aiming to simplify procedures for entrepreneurs to establish and operate businesses, and by assisting ministries and government departments in the design of clear sets of regulations and guidelines. IDG managed the development of lower-cost business solutions that are useful and useable for small enterprises, specifically information on prices, quality of production, and market opportunities.
IDG created a feasibility study and master plan for the planned Caymanas Special Economic Zone (CSEZ) through the World Bank. The main objective of this project was to prepare a comprehensive feasibility study for the CSEZ in Jamaica that considered the best uses and development phasing of the 1,200-acre CSEZ site, in a manner that is financially feasible for a private developer, PPP, or other arrangement. The zone operated under the rubric of Jamaica’s SEZ and PPP policies. The study also drew on best practices in the Caribbean and those linked to transshipment hubs globally, and considered the particular circumstances that affect private investors in Jamaica.
IDG, in collaboration with NatWest Bank, designed and implemented a training program for bankers in Russia to assist Russian banks in better understanding financing options for small businesses, in particular financing for franchises. Bankers learned how to develop a department and product specifically to be able to offer finance to franchise operators.
The project concentrated in formulating the franchise packages into applicable modules to enhance the package’s implementation process. The legal reviews of the environment as well as financial sector analysis were also completed and included surveys of commercial bank and lease financing mechanisms.
The IDG team conducted educational workshops, created operational, financial, and accounting procedures, and distributed an SME Handbook with guidance on equipment financing, business planning, and licensing and regulatory requirements.
IDG reviewed a franchise program sponsored by the Malaysian Government with the specific aim of increasing investment and SME ownership opportunities for ethnic Malays. IDG conducted a financial sector analysis and assessed the viability of Franchise Association as a self-regulatory body; trained trainers and consultants; and conducted workshops for the business community and the professional staff within the Ministry.
IDG took lead responsibility for franchisor development and support, providing direct technical assistance and capacity building to SSFP’s Franchise Manager, Franchise Development and Operations teams. Health clinics supported were private clinics.
IDG assisted with gemstone sector development by providing key technical deliverables for the ASMED strategy on developing the industry including training courses, establishing market linkages at the American Gem Trade Association trade show, and contributions to the international marketing plan.
Through a franchise development program managed by IDG, USAID South Africa succeeded in creating several hundred SME opportunities for formerly disadvantaged black entrepreneurs. The project established over 200 franchise businesses and trained hundreds of local small entrepreneurs in all aspects of franchise development including contracting, operations, training, expansion, marketing, franchisee relations and accounting.
In South Africa, the IDG Consortium assisted the USAID African Housing and Infrastructure Facility at all levels of the process of structuring potential transactions in support of investments.
The goal of the project was to study both agricultural and non-agricultural investment opportunities along two growth corridors in Libera. Over a dozen specifical proposals were created, and were used as the basis for the Ministry of Planning 2011 Economic Forum whose goal was to help Libera achieve its goal of being a middle-income country by 2013, through private sector development.
IDG built capacity of the Sri Lanka Tourism Development Agency’s One Stop Unit to implement streamlined investment approval processes and to become a real “One Stop Shop” for investment in the tourism sector in Sri Lanka. To speed up the process of getting approvals for foreign and domestic investors, IDG worked with the Sri Lanka Tourism Development Agency and the Urban Development Authority to reduce the number of steps needed before moving forward with investment and to streamline processes. The team also advises on creating a simple database to track approvals through the system, as a stopgap improvement until a more comprehensive automated system can be put in place.
To speed the process of getting approvals for foreign and domestic investors, IDG is working with the Sri Lanka Tourism Development Agency (SLTDA) and the Urban Development Authority (UDA), to reduce the number of steps needed before moving forward with investment, to streamline processes, to simplify and reduce the numbers of forms, and to make information better available to potential investors as to what the processes and requirements are for getting investment approvals. The team also is advising on creating a simple database to track approvals through the system, as a stopgap improvement until a more comprehensive automated system can be developed and put in place. Since some investment approvals are needed at the national level and some are needed at the provincial levels, it would be helpful also to assess the speed and ease of approvals at the provincial level, and compare across provinces, to encourage competition among provinces to make their processes better.
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