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Summaries of EU Legislation

Involving the private sector in generating jobs and growth in developing countries

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Involving the private sector in generating jobs and growth in developing countries

This European Commission communication sets out a strategic framework for strengthening the private sector’s role in developing countries. The aim is to increase growth and jobs by helping beneficiaries to improve their business environment and access to new financial markets.

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries (COM(2014) 263 final, 13.5.2014).

SUMMARY

This European Commission communication sets out a strategic framework for strengthening the private sector’s role in developing countries. The aim is to increase growth and jobs by helping beneficiaries to improve their business environment and access to new financial markets.

WHAT ARE THE KEY OBJECTIVES OF THE COMMUNICATION?

Main challenges

The private sector accounts for 90 % of jobs in developing countries, making it an essential partner in the fight against poverty. However, it faces big challenges. These include lack of access to finance (especially for medium-sized businesses), poor export competitiveness, inefficient tax systems, infrastructure and power shortages, legal uncertainty and corruption.

SUSTAINABLE GROWTH

To help developing countries in implementing policies to support the private sector, the Commission wants to:

strengthen the potential of the private sector as a financing partner, implementing agent or intermediary: the aim is to make European Union support more effective and efficient in local development and in areas such as sustainable energy and agriculture, as well as infrastructure,

play a stronger role as a facilitator of companies’ own commitment to development, by encouraging responsible investment in sustainable supply chains and production patterns.

CREATING JOBS

EU aid may cover a wide range of actions designed to create a better business climate to attract foreign investment as well as increase productivity, thus improving income and employment opportunities.

Other types of support might involve:

reducing red tape and regulatory barriers for business,

reviewing laws and policies to help trade,

providing services such as training and information to improve managerial skills as well as encouraging know-how and technology transfer,

strengthening local micro, small and medium-sized firms.

Microfinance is also a priority. A range of loans, savings and insurance products could be offered to low-income groups in developing countries.

WORKING WITH PARTNERS

In implementing its support, the EU would work with international organisations (such as the European Investment Bank and United Nations agencies), public institutions from partner countries, private companies, citizens’ or private organisations (such as chambers of commerce), and EU countries.

Policies to promote public-private partnerships and the blending of projects (i.e. involving funds from a variety of sources) will need to be developed.

2014-2020 EU aid

This strategic framework is reflected in the programming of EU development aid from 2014-2020, particularly the Development Cooperation Instrument’s thematic programmes.

For further information, see also ‘Private sector development’ on the European Commission's website

last update 05.11.2014

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