Objectives

Our Private Sector Development Strategy has three major objectives:

To create enabling conditions for private businesses to strive
To generate business opportunities for the private sector in ADB-financed public sector projects
To catalyze private investments through direct financing, credit enhancements, and risk mitigation instruments

Create Enabling Conditions

ADB assists governments of developing member countries (DMCs) in establishing the right conditions for business and a policy environment conducive for economic growth and poverty reduction.

Reforms that spur entrepreneurial development and stimulate foreign and domestic private investment enlarge the private sector's role in the economy. As this transition occurs, the government must reduce its presence as owner-producer and instead concentrate on facilitating and regulating private sector activities to ensure markets work and to protect public interest.

The shift in the government's role towards a neutral and objective regulator frees public resources, such as those previously used to support loss-making state enterprises. These resources can then be directed to social services, including basic education, health services, and social safety nets. In many DMCs, growth and, ultimately, poverty reduction depend on such a shift.

ADB's Working Group on Infrastructure Regulation developed the "Regulation of Utilities and Monopolies: Frequently Asked Questions (FAQ)" in collaboration with the Institute for Public-Private Partnerships. The FAQ serves as a primer for those seeking a general understanding of regulatory theory, practices, tools, and policies. Read more.

Top

Generate Business Opportunities

ADB explores opportunities for private sector participation during project preparation. Where this can be achieved effectively, ADB designs projects to provide specific opportunities in which the private sector can participate.

During project preparation, ADB explores the scope for private sector participation in the provision of essential goods and services. Private investment in infrastructure projects that are properly regulated can relieve pressure on public budgets and enable governments to direct more resources to social spending. Private sector participation can also improve the delivery and efficiency of essential services and extend these to the poor.

Where scope for private sector participation is identified ADB designs projects to provide specific opportunities in which the private sector can participate. For example, ADB financing of a state-owned water treatment plant may require its operation and maintenance to be subcontracted to a qualified private sector entity selected on a competitive basis. This creates a business opportunity for the private sector.

Top

Catalyze Private Investments

ADB provides direct financial assistance to private sector projects. Such projects must have clear development impacts and/or demonstration effects that go beyond the benefits captured in the financial rate of return. ADB considers projects that are

catalytic - using ADB's financial resources to attract other investors or lenders, or
additional - complementing, not substituting for commercial sources of finance, or
adding value - making the project more environmentally or socially friendly, create more jobs, impart better skills or technology, or raise the standards of corporate governance.