Policy highlights:

• Development partners are increasingly promoting private sector development in their development cooperation programmes, because they recognize the importance of the private sector in contributing to income generation, the production of goods and services, and tax revenue.
• To ensure that direct support to companies effectively contributes to sustainable development, several issues need to be addressed: 1) efforts should be made to provide resources to companies that can offer some ‘value for money’ guarantee; 2) as private companies aim for profit, it is important to select projects that demonstrate financial feasibility while maximising contributions to economic, environmental and social goals; 3) to ensure that project targets are achieved, efforts must be made to increase the accountability of the private companies supported by monitoring results; and 4) to improve the effectiveness of private sector development it is necessary to strengthen ex-post evaluation of project impact and sustainability.