Overview

The Global Development Challenge
The International Vision
CIDA's Strategy

In Dakhalia, Egypt, entrepreneurs can save time and effort thanks to CIDA's support for a "one stop shop" to apply for business licences from regulatory officials. Small and medium-sized enterprises in Sulawesi, Indonesia, will find it easier to start up and run their businesses thanks to an Asia Foundation project to streamline regulations. Small farmers in Burkina Faso are learning how to compete in the marketplace and how to diversify their production in a program to revitalize the agri-food system. In Afghanistan, small entrepreneurs, mainly women, are receiving financial support to start businesses thanks to the Microfinance Investment and Support Facility for Afghanistan. Trade departments in the Eastern Caribbean are strengthening their policy formulation and negotiation strategies to participate in the global trading system.

CIDA supports these projects, and many more, to help its partners strengthen the private sector in some of the world's poorest countries.

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The Global Development Challenge

Despite the progress achieved, considerable challenges remain. The lives of the poor will not improve significantly unless economic growth generates the private and public resources required to reduce poverty.
A dynamic private sector creates meaningful jobs, meets the needs of consumers, and generates tax revenues that can support essential public services such as health and education. To make a sustainable contribution to poverty reduction, growth must be led by the local private sector and it must actively engage and benefit those living in poverty.

The private sector in most developing countries is made up of micro, small and medium-sized entreprises (MSMEs), which have the potential to play a major role in economic growth through the jobs and income they create and the innovation they generate. However, in many countries, there are significant barriers to doing business, such as:

• complex and inefficient regulations;
• insufficient financial and business support services; and
• poor access to markets.

For women entrepreneurs, who make up the majority of the very poor, these barriers are even higher: in most countries, women have less access to credit and to productive assets like land, education, training and technology than men.

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The International Vision

There is a clear consensus in the global community that economic growth through a healthy private sector is essential to reducing poverty. Economic growth also plays an important role in countries' abilities to achieve not only the first Millennium Development Goal (MDG)-to halve the proportion of people living in poverty globally by 2015-but the rest of the MDGs as well. The UN Commission on the Private Sector and Development reinforced that relationship in its 2004 report, Unleashing Entrepreneurship Making Business Work for the Poor. The commission recommended that governments remove barriers to growth and form public-private partnerships to provide entrepreneurs with access to financing, skills, and basic services. It also recommended that the global private sector develop business models that could contribute to poverty reduction. The international development community has embraced these recommendations, and many developing countries are focusing on private sector development as a key element in their poverty reduction strategies and plans.

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CIDA's Strategy

CIDA brings recognized Canadian expertise to bear in developing countries' efforts to reduce poverty through the development of the local private sector. Areas of focus include:

• creating an enabling environment: supporting policy, legal, and regulatory reforms that address constraints to doing business faced by entrepreneurs in developing countries, with particular attention to specific constraints faced by smaller enterprises and those operated by women entrepreneurs and entrepreneurs in rural areas;
• promoting entrepreneurship: helping entrepreneurs in developing countries access the finance, skills, knowledge, and technologies they need for innovation and growth, with a focus on reducing barriers to access by small and medium enterprises and women entrepreneurs; and
• connecting to markets: helping developing countries integrate into the global trade system, and facilitating sustainable economic opportunities for entrepreneurs in new local, regional, or international markets.