Private sector-led economic growth, fueled by private investment, increases economic opportunity, enhances access to public and private services, and reduces poverty. USAID’s history of partnering with the private sector shows that partnerships are most effective when they have deep links between business strategies and development objectives – creating intrinsic sustainability.

The context for financing global development has evolved dramatically over the past decade.  Private capital now accounts for about 90 percent of financial flows to developing countries, due to growing private sector recognition of the financial and social benefits of investing in the developing world and governments’ expanded efforts to diversify their economies and access capital for social investment. Increased investor interest in developing economies represents a watershed opportunity for governments and development agencies to mobilize the necessary resources to deliver development impact on the order of magnitude required by the Sustainable Development Goals (SDGs).

USAID is uniquely positioned to catalyze private resources towards development with its far-reaching global footprint. The agency also has a deep understanding of country and sector context, including relationships with key stakeholders, and a broad set of tools that can specifically address the risk-return profile – grants, technical assistance, guarantees, partnerships, and convening power. These attributes also position USAID well vis-à-vis other development organizations, such as development finance institutions (DFIs) who may operate only in later stages or in more established markets. USAID addresses risk and transaction costs, provides support that builds a pipeline of investments for DFIs and the private sector, and draws on deep technical expertise in key sectors (agriculture, water, health, energy, and education, etc.) and extensive relationships across the public and private sectors.

USAID’s Office of Private Capital and Microentreprise aims to leverage private capital and expertise on an agency-wide basis to improve development and increase the funds available, while also transitioning developing countries to freer, more transparent, and more stable market economies.

For more information on how to partner with USAID to catalyze private investment, contact the Office of Private Capital and Microenterprise at pcminfo@usaid.gov.