Themes

CIDA's private sector development (PSD) policy identifies three focus areas:

Creating an Enabling Environment
Promoting Entrepreneurship
Connecting to Markets

Creating an Enabling Environment

Sound and effective policies, laws, and regulations form part of an enabling environment for PSD and help the poor to engage in entrepreneurship. Support for the enabling environment-also known as the "business climate" or "investment climate"-means helping entrepreneurs who are operating in the informal economy, especially women, to start up formal enterprises. Support also means fostering a level playing field for small enterprises through improving registration and incorporation procedures; reforming contract, property and tax laws; and reducing other government-created barriers to business creation and growth.

Here are a few examples demonstrating how Canada is contributing to an enabling environment for PSD:

• CIDA supported the creation of the High Level Commission on Legal Empowerment of the Poor and continues to be actively involved in supporting its work. The commission, co-chaired by Madeleine Albright and Hernando de Soto and supported by working groups and experts, is hoping to identify opportunities to mobilize domestic resources in development by strengthening the legal rights of the poor, with a focus on property rights needed by informal or poor entrepreneurs.
• In Indonesia, Canada is participating in a G8 Business Climate Pilot with the United States and Japan consistent with commitments made at the G8 Summit in Sea Island. In this pilot, CIDA will work with the Asia Foundation to create an environment in Sulawasi conducive to small and medium enterprise growth by addressing and streamlining regulatory impediments faced by entrepreneurs.
• CIDA supports the Foreign Investment Advisory Service (FIAS). FIAS advises developing-country governments on how to attract and retain direct foreign investment and maximize its impact on poverty reduction.

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Promoting Entrepreneurship

CIDA will promote entrepreneurs in developing countries, particularly micro, small and medium-sized enterprises (MSMEs) and women, by supporting them in accessing finance and financial services, as well as the skills and knowledge they need to innovate and grow. Several examples of initiatives in this area are listed below:

• Canada is working with other donors to support new approaches to mobilizing the entrepreneurial poor-often in the informal sector-through the World Bank International Finance Corporation's Grassroots Business Initiative and the Inter-American Development Bank's Multilateral Investment Fund. Moreover, the Canada Investment Fund for Africa ($100 million in public funds to be matched by the private sector) will stimulate African and foreign investment in the continent through risk capital to support growth-generating private investments.
• Canada supports microfinance and the development of inclusive financial sectors. Visit the Microfinance Gateway for resources related to the Microfinance industry. To see what Canadian organizations are doing in Microfinance, visit the Canadian Gateway to Microfinance. Building on strong experience in the development of the cooperative model globally, Canada is employing strategic approaches to support sustainable access of the poor to a range of financial services. Canada hosted the Global Microcredit Summit in November 2006.
• CIDA is supporting the UNDP's Growing Sustainable Business initiative on a pilot basis to test one approach to brokering sustainable productive investments in developing countries through linkages involving small and medium enterprises and larger investors.

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Connecting to Markets

CIDA is helping developing countries integrate into the global trading system to promote and foster fair economic opportunities for entrepreneurs. CIDA will focus on helping development partner countries to connect to markets by providing assistance in implementing trade agreements, reforming trade policy, and developing export strategies. Also, CIDA is helping women and men entrepreneurs, especially in rural areas, to supply goods and services to local, regional, and international markets.

CIDA has created a Local Enterprise Investment Centre in Bangladesh that will help SMEs enter into investment partnerships with domestic or foreign companies to acquire finance, technologies, knowledge, and skills.