The private sector is the engine of economic growth - creating jobs, increasing trade, providing goods and services to the poor and generating tax revenue to fund basic public services such as health and education.
As well as stimulating growth, new thinking within the private sector, shaped by the market, can also offer insights in to how to ensure better access to vital services or goods such as medicines or information.
What we do
DFID engages in three broad ways to maximise the role of business in development to help achieve the Millennium Development Goals. We work with business to:
- promote responsible and successful business
- accelerate growth by creating an enabling environment for business
- develop new approaches to business that generate profits and have strong developmental impact.
Financial services and regulation
More than two and a half billion people have no bank accounts or insurance - services that can mean the difference between surviving and thriving.
Small businesses account for over 45% of all employment in developing countries. Their growth is vital to creating jobs and increasing prosperity - yet they are typically stymied by difficulty in raising finance.
Read more about what we are doing to strengthen the financial services sector
Private investment
We work to mobilise responsible and sustainable private investment in poor and fragile regions. We do this through piloting new approaches to risk-sharing with investors in areas that will achieve significant development benefits.
Impact investments aim to solve social, development and environmental challenges while generating financial profit.
We are strongly committed to promoting the development of inclusive business models that offer both commercial returns and development impact.
Read more about what we are doing to promote inclusive models.
We will also work with a revitalised CDC to support and encourage investment in the private sector in developing countries. Read more about our work with CDC.
We also promote investments through our holdings in the International Finance Corporation (IFC) and The Multilateral Investment Guarantee Agency (MIGA).
Infrastructure and energy
Adequate infrastructure services (including transport, electricity and water supply) are vital to wealth creation and the achievement of the Millennium Development Goals. Infrastructure impacts on poverty both directly, through providing access to basic services, increased employment and income generating opportunities, and indirectly by underpinning wealth creation and enabling the development of new enterprise.
DFID support is channelled through the various facilities of Private Infrastructure Development Group (PIDG), but we also support a number of World Bank programmes on output-based aid, water and legislation reform.
Green Africa Power (GAP), a new PIDG facility, has been developed jointly by DFID and DECC to tackle specific constraints to private sector investment in renewable power generation in Africa. GAP will invest in renewable energy projects to demonstrate their viability to encourage future projects and attract private developers and investors. GAP aims to support projects that will install ~270MW of renewable energy in Africa over 4 years, avoiding an estimated 2.3m tonnes of CO2 emissions. More information on GAP can be found here.
Basic services
We are increasing our work with non-state actors in water and sanitation, health, and education.
For example, Harnessing Non-State Actors for Better Health for the Poor (HANSHEP) is a new private sector health initiative supported by DFID, the World Bank, the IFC, the Gates and Rockefeller Foundations, USAID, AusAid, KfW of Germany and the Government of Rwanda. HANSHEP supports the private sector to improve equitable access to quality, affordable and sustainable health products and services for the poorest. Information on the individual programmes supported by HANSHEP can be found at the HANSHEP website.
Responsible Business and Investment
Businesses that obey the law and operate in a fair, competitive way contribute to society. We expect business to behave responsibly and we support voluntary and business-led standards.
Read more about what we are doing to promote responsible business and standards.