Sida's work with private sector
Private companies and financiers are important for creating jobs and reducing poverty, but in Sida's partner countries they are often hindered by complicated rules and lack of financing. Sida works to improve the functioning of the market in which companies operate, especially for young people and women.
Why do Sida work with the private sector?
Multiple crises have a negative impact on businesses
The number of countries at risk of debt crisis has doubled since 2015, which also affects the private sector. The situation is exacerbated by the uneven economic recovery since the pandemic. Increased global uncertainty with inflation and debt crises negatively affects businesses, especially small and medium-sized enterprises, reducing their income.
Informal economy creates problems
In many countries, running a business is expensive and cumbersome. Therefore, the majority of businesses are located in the informal economy. These jobs are often low-paid, insecure and without regulated conditions such as working hours and employment type.
Unequal entrepreneurship
It is still mainly men who start and run businesses in Sida’s partner countries. In Africa, there are only three countries where an equal number of women and men are entrepreneurs.
Examples of what Sida has contributed to
Digitalisation that makes it easier to run a business
Sida supports the development of digital services that facilitate banking services such as payments and transfers. In Uganda, for example, over 1.5 million people, including 625,000 women, have improved their digital skills and can now use services such as mobile payments, e-recruitment, e-stock management and banking services. Sida’s support to digitalisation contributes to digital marketplaces that provide access to new markets and information.
Contributing to the green transition
Enterprises are increasingly important for sustainability. At the global level, Sida’s support to the International Finance Corporation (IFC) has helped mobilise over USD 4.5 billion in bonds that have helped finance green and social projects in developing countries.
Sida's work with private sector development
Sida supports organisations, institutions and companies around the world that empower people to change their lives. In many countries where Sida works, the market does not function properly. Starting and running a business is often difficult, which makes it difficult for the private sector to develop and create jobs. Many jobs are in the informal sector where the conditions for employees are poorer and companies do not pay taxes. This makes it difficult for people to improve their living conditions and for countries to strengthen their economies. Global crises have further hampered development. Development aid helps to enhance the private sector, which is essential for the recovery of economies and the improvement of people’s lives.
Sida works to ensure that people living in poverty have opportunities to participate in, contribute to and benefit from economic development. The aid helps to develop markets where people can participate on equal terms. Here are some examples of projects that Sida supports:
In Zambia, Sida’s support has increased the profitability of over 412,000 farmers, including 108,000 women, through a range of services and products. Sida’s support has enabled Zambia’s smallholder farmers to increase their income by a total of USD 38 million.
In Albania, CNVP (Connecting Natural Values with People) is working on a new approach to streamline and improve the cultivation and export of medicinal and herbal plants to the EU. Sida’s support has resulted in local farmers gaining more knowledge about efficient cultivation methods and more secure incomes.
About the work in Albania on the CNVP website
The ability to find new solutions is high in low- and middle-income countries. New solutions and ideas contribute to development, but many innovators are hindered by a lack of capital. Lack of money, knowledge or discrimination prevents people from using financial services, such as banking, insurance or the ability to trade shares. Sida works to ensure that more people have access to financial services. Here are some examples of programmes and projects that Sida supports:
For economic development to benefit everyone, a financial sector where everyone can participate is needed. Sida supports the Global Financial Inclusion Partnership (CGAP), which raises awareness of how financial services can be developed and used for remittances (money sent home), insurance, pension schemes and job creation.
Sida supports the World Bank’s Business Environment and Finance Centre (IFC) for private sector development. In Liberia, collaboration with the central bank, among others, has resulted in new guidelines for digital credit that opens doors to new forms of credit, in particular for people living in poverty.
The Financial Sector Deepening Africa (FSD Africa) fund helps to increase people’s access to financial services, such as loans, savings and digital payment solutions. There is a particular focus on women, young people and people in rural areas.
Small and medium-sized businesses account for more than half of the world’s jobs and are a major part of many low-income countries’ economies. But businesses are often hampered by a lack of both finance and entrepreneurial skills. This is particularly challenging for female small business owners, who are often held back by social norms. Sida contributes to the development of small and medium-sized businesses, especially those run by women entrepreneurs. Here are some examples of programmes and projects that Sida supports:
Through the Challenge to Change project, which offers financial support to innovative businesses that create employment, Sida’s support has led to the creation of 700 new jobs and the retention of 5,000 in the more than 190 innovative business ideas supported.
Sida works with guarantees that enable banks and other investors to invest money in small businesses. When business owners and entrepreneurs in Sida’s partner countries have access to capital, their businesses can more easily develop, create jobs and increase income, which helps to reduce poverty. Through Sida’s loan guarantees, investments of SEK 24 billion have been made in companies and endeavours that help people improve their living conditions on all continents.
Georgian businesses often lack access to capital. Together with the bank TBC, Sida has provided a guarantee that has yielded very positive results for most loan recipients. The guarantee has enabled people running micro, small and medium-sized businesses to take out loans and increase their access to finance and credit. Three out of four entrepreneurs reported an increase in sales, profits and employment. The guarantee is particularly aimed at female entrepreneurs in the service sector.
- About the co-operation with TBC Bank on Openaid
- About the cooperation with MFO Crystal on the Sweden Abroad website
The private sector has an important role to play in the transition to a more sustainable world. This applies to everything from tackling corruption to achieving environmental sustainability, gender equality and respect for human rights. Here are examples of programmes and projects that Sida supports to contribute to sustainable business:
Sida supports the CREST (Corporate Responsibility in Eliminating Slavery and Trafficking in Asia) programme implemented by the International Organisation for Migration (IOM). By empowering recruitment agencies and companies to recruit and hire according to international principles of ethical recruitment, the programme improves the conditions of people who have migrated for work.
Agriculture is crucial to Tanzania’s economy and people’s livelihoods. Approximately two-thirds of jobs are in agriculture, around 80-90% of agricultural land is owned by smallholders and many women work in agriculture. The effects of climate change such as drought and flooding are hitting smallholders hard and risk hampering the country’s sustainable development.
Sida collaborates with the World Conservation Union (IUCN) and Tanzania’s Ministry of Agriculture to develop a project that the Green Funds have previewed and shown interest in. The aim is to create the conditions for green practices that enable a new type of financing for agricultural development.
Support to this area represents 10 per cent of Sida’s total disbursements. The area has a broad definition that includes development of the private sector as described here (e.g. industry, banking and financial services) and support for, for example, agriculture and forestry, fisheries, communications and certain trade-related initiatives.
Updated: October 18, 2023