Download PDF (4.08 MB) - ReliefWeb

68
4.2 INCLUSIVE private sector development
4.2.1 Introduction
In crisis and post-crisis situations, the underpinnings of private sector activities—including
a business-friendly policy environment, access to finance and markets, value chain
linkages, capacity, and infrastructure—are usually damaged, destroyed, or in an early
stage of development. As a result, markets tend to favour existing elites and to reinforce
established patterns of inequality and social exclusion. When obstacles can be overcome,
the micro, small, and medium enterprise sector is typically the most resilient part of the
economy, with the potential to generate broad-based employment and income generation.
This section addresses UNDP’s role in supporting the development of an inclusive private
sector in crisis and post-crisis situations. It focuses on (a) inclusive market development,
(b) inclusive financial sector development, and (c) the establishment of business development
services. Each of these processes has the potential to create employment and
income generation among crisis-affected people, enabling these individuals to contribute
to economic recovery. These processes are complementary, and they are all relevant to
livelihoods and economic recovery programming. Depending on the context, such processes
can contribute to poverty reduction, food security, peace-building, and disaster
resilience. While these processes are sometimes pursued as standalone projects, they can
be—and often should be—incorporated into broader projects and programmes. And
it is certainly the case that all of these processes call for interventions at multiple levels,
from the macro level of removing policy and regulatory constraints to the micro level of
strengthening capacity among targeted entrepreneurs and enterprises.
Interventions in support of inclusive private sector development aim both to strengthen
local market systems and to improve the position of those individuals and communities
that are adversely affected by crisis scenarios. . Improved access to markets, finance, and
information among the population as a whole can indirectly benefit target groups. Focusing
exclusively on target groups can strain community relations and limit the development of
effective markets. At the same time, measures are usually necessary in the early recovery
period so as to ensure that vulnerable groups are not excluded from the growth process,
i.e., that growth is inclusive, with targeted populations able to both participate in and
benefit from economic recovery. A delicate balance is therefore required.
The appropriate timing for initiating interventions to promote these processes is typically
about four to six months after stability has been achieved. Given the time normally required
to finalize programming arrangements, however, some quick-start, quick-win activities
may begin immediately. Such activities may include, for example, the training of key
policy makers and funding for financial service providers that meet minimum conditions.
40 UNDP’s inclusive market development framework
has similarities with the Making Markets Work for
the Poor (M4P) approach of DFID and SDC, the
Opportunities for the Majority approach of the
Inter-American Development Bank, and the Next
Four Billion approach of the IFC.
4.2.2 Inclusive markets, inclusive finance, and business development
services
Inclusive markets are markets that extend choice and opportunity to poor and marginalized
people as producers, consumers, and wage earners. The concept of inclusive market
development—making markets work better for the poor—is central to UNDP’s private
sector strategy. 40 This concept builds on the premises that accessible and competitive
markets facilitate poverty reduction and that market-based economic engagement with
the poor is essential for sustainable development. Programming for inclusive market
development can be especially important for crisis-affected women, who typically expe-
Livelihoods & Economic Recovery in Crisis Situations