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  • Donors and the Private Sector? Six guiding criteria when donors seek to mobilise private sector resources

    • February 05, 2018
    • European Institutions
    • Financing mechanisms
    [Image: Donors and the Private Sector? Six guiding criteria when donors seek to mobilise private sector resources]

    In recent years, donor governments have increasingly looked to new forms of financing beyond Official Development Assistance (ODA) to contribute to meeting the financing needs of sustainable development. The Addis Ababa Action Agenda, adopted in 2015, reiterates donor governments’ commitments to ODA, but places strong emphasis on the use of ODA and other international public finance to mobilise private finance in support of development objectives. The Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) is revising its rules for the reporting of ODA, with the explicit aim of incentivising further donor investments in private sector instruments.


    Financing mechanisms aimed at mobilising private sector resources are heavily focused on areas such as infrastructure development, and only to a much smaller extent on social sectors. Yet, there is increasing interest in relying on such mechanisms more strongly also in relation to health, including sexual and reproductive health and family planning. Examples of the current use of such mechanisms in relation to health include public-private partnerships relied on for the financing and running of healthcare facilities. One key example of a financing mechanism that is looking to mobilise additional international and domestic private and public resources specifically for reproductive, maternal, new-born and child health is the Global Financing Facility, which is currently supported by the governments of Canada, Japan, Norway and the United Kingdom.


    As Countdown 2030 Europe, we welcome donor governments’ efforts to mobilise additional resources in support of development objectives and we recognise the potential of the private sector to contribute to meeting the financing needs of sustainable development. Yet, we also share the concerns of many other civil society stakeholders regarding the risks of greater donor reliance of the private sector and are wary of the effects that it may have on the financing of rights-based sexual and reproductive health and family planning services in low- and middle-income countries.


    In our recently launched policy brief “Six Criteria for Donor Engagement with the Private Sector”, we set out six criteria that we believe donor governments should be guided by as they increasingly seek to mobilise private sector resources in support of development objectives. These are:


    1. Meet existing commitments to Official Development Assistance
    2. Ensure that there is no diversion of support from social sectors, including sexual and reproductive health and family planning, and the poorest countries
    3. Demonstrate financial and development additionality of investments
    4. Ensure compliance with development effectiveness principles and human rights standards
    5. Assess and be guided by development impact, including impact on poor and marginalised groups
    6. Be careful not to restrict recipient country fiscal space


    Read the full policy brief here.

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