The donor community can play a critical role in the transition to longer-term stability and development after conflict—starting shortly after the conflict has ended. And although the role of the private sector in achieving peace and development has historically been ignored, the good news is that the private sector has now become a priority for many donors.
Many factors impact the likely success of donor support to post-conflict private sector development (PSD). The Donor Committee for Enterprise Development (DCED), which works with donor staff, experts, and field practitioners to tease out joint lessons, principles, and guidance based on real-world experience, shares here the elements common to most successful projects:
Contrary to the belief that donor programs involving the private sector only impact economic development, we now see that such interventions can be valuable across all aspects of peace-building. This has rarely been recognized, although the opposite—that donor programs should at the minimum “do no harm”—is better documented. Designing programs that achieve these broad-reaching impacts requires a deep understanding of the conflict and needs to be coupled with careful monitoring of program impacts.
Prioritization of donor support is critical, as is avoiding the temptation of trying to do too much, too quickly, and overestimating the ability to deliver change. This prioritization is tricky, as it depends entirely on the context. Applying Growth Diagnostics is a good starting point to help donors organize information and identify effective approaches. Since constraints to growth are likely to be present in all contexts, political economy and conflict analysis—combined with wide stakeholder consultation—can help identify the most pressing issues that can realistically be addressed.
Starting on multiple simultaneous tracks has proven effective. This includes measures to produce quick wins, but also efforts to lay critical foundations for medium to longer term development. It also implies a combination of macro-economic and regulatory reforms on the one hand, and more direct interventions on the other.
Focusing reforms at the right level can help too. Where no legitimate or functional central government is in place, reforms may at first be more effectively delivered at the local or regional level. A constant task for donors is to find a sound balance between short- and long-term strategies, peace-building, and economic development goals. The implications each may have for the other need to be explicitly considered when programming.
Programming approaches in post-conflict countries need to be flexible, to allow time to react to changing situations and to reallocate resources when new opportunities arise or conflict dynamics deteriorate. Donors should also be prepared for key actors in the government to change, and build reform efforts around multiple stakeholders and key individuals in society with staying power. These can include business leaders, private sector representatives, and officials in government ministries.
This is a recurring theme, perhaps because donor coordination in post-conflict countries faces many obstacles. More than elsewhere, donors in post-conflict countries are under pressure to spend substantial amounts of money in a short time, which can be a disincentive for coordination and pooling resources with others. Yet the risks of a fragmented and incoherent approach remain high. An obvious entry point for coordination is in the research and gathering of up-to-date information, which is difficult for any organization to successfully accomplish on its own. Multi-donor trust funds can be a practical mechanism in this case.
Coordinating policy advice to the central government on business environment reform is more difficult, but very important. Business environment reform efforts may not only improve the conditions for doing business, but also contribute to improved state capacity and perceived legitimacy. In several countries, donors set up a country group on PSD as a regular forum to share information or formulate common positions.
Achieving positive results in post-conflict countries depends on collaboration with other actors, some of which may be beyond the traditional “comfort zone” of donor organizations. This may involve working closely with humanitarian groups to ensure market-integrated relief, or relying on international military forces for logistical support and security, especially to reach remote areas. Working with multinational companies on governance issues or as partners in developing value chains can be equally important. For example, Heineken is developing local maize and sorghum supply chains in Rwanda and Sierra Leone, with co-funding from the Dutch Ministry of Foreign Affairs. Keeping an open mind and following a pragmatic approach to such collaborations can help donors navigate more successfully through the challenges of post-conflict programming.