The purpose of private sector development

Ask any donor agency, or executing NGO: their role in private sector development is temporary.  “We scan the situation, we design an intervention to nudge an economic system, and exit once we have the ball rolling”.

But the reality of executing private sector development projects is that this premise is lost somewhere along the line. “We don’t fully comprehend the situation, we create a big promise, which seems to make sense on paper, and we actually couldn’t tell at what point we think we have achieved our goal”.

So here’s something I have been meaning to write for a long time, something which might help bridge this gap between intent and action. The purpose of a private sector development project is not to deliver impact on people, planet and profit (ppp). How could a 4 to 5 year stint ever deliver a tangible social and environmental result? Yes, your impact evaluation might show that the project delivers impact, but that only indicates what is feasible given the input you have provided. But what does that mean for the long-term business viability of your idea, and is your idea desirable enough for your intended entrepreneurial audience to take over, once the impact has been demonstrated?

Rather than focusing on the results of a project, I propose to take a different perspective on the purpose of private sector development. The task of a private sector development project is to create a temporary organizational vehicle, which is geared to search for the new business model that will deliver replicable and scalable ppp impact. In other words, it’s not the impact itself we’re after, it’s the business model that will deliver the impact. Private sector development, as a complementary coalition of for-profit, and non-profits, should limit its resources to validating such a model, ie. a feasible, viable, and desirable model. Exit comes after such validation.

Over-focusing on the results agenda in development is harmful to private sector development. It assumes PSD projects already know what they need to execute on. It’s a promise, which seems to be necessary to make all the time to obtain funding, but it’s a promise that will never hold. The reality is that every PSD project on day 1, is faith-based initiative. If you neglect that fact, then you will be tracking reality throughout your project.

Rather, give yourself time in your private sector development project, time to:

  1. focus on your targeted demographic
  2. immerse yourself into the nature of the problems you aim to tackle
  3. prototype, and iterate to validate solutions

Gear your impact assessment to metrics that validate your new business model: execution will take care of itself thereafter.