Private Sector Promotion

Ein dynamischer Privatsektor schafft Wachstum und Wohlstand ©BDI / Uwe Schmidt

A dynamic private sector provides the foundation for economic growth and sustainable development. Business initiatives therefore require business-friendly framework conditions.

Private sector engagement can only be developed where framework conditions are conducive and dependable. In many partner countries involved in development cooperation the framework conditions cripple business commitment. Macro-economic imbalances, poorly functioning financial sectors, only partially efficient administrations, overregulation, inadequate protection of (intellectual) property rights, corruption and nepotism, legal uncertainty, violence and criminality are only some of the less conducive framework conditions which can be found in these countries. They result in unnecessary costs for planning, financing, operation and risk coverage.

They thus impede the development of private sector initiatives – both by domestic entrepreneurs and by foreign investors. The main barriers to trade and investment are bureaucratic and often intransparent procedures, as well as difficulties in enforcing legal requirements. By promoting regional integration, development policy plays a key role in establishing larger - for foreign companies more attractive - markets in developing countries. Inadequate physical infrastructure hinders economic development in many countries. To develop physical infrastructure in the transport, water and energy sectors, substantial public funding and innovative cooperation models are required to ensure development-funded infrastructure is kept in good shape. Development cooperation should in general contribute more to cutting transaction costs for business initiatives. That it is their own responsibility to create a business-friendly framework should be pointed out to partner governments. The resulting efforts should be supported by a corresponding range of services.