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Tuesday, 28 May 2013

Weak EU support to private sector development

An April seminar on the “Evaluation of the European Union’s support to private sector development in third countries” showed that much more needs to be done to maximise the impact of EU money on the ground, since linkages between EU support to private sector development and poverty reduction and job creation remain very distant.  
The evaluation included a survey with representatives of EU delegations and country visits, and covers all the support given during the 2004-2010 period in all regions where the EU provided direct funds, which amounted to €2.4 billion. Most of the funding was focused on the areas of facilitation of investment and access to finance (23%); sector budget support (20%); and investment and inter-enterprise cooperation (19%). In contrast, there was minimal support for micro-enterprises (2%).
Especially, the evaluation report indicates that “Commission representatives did not have a clear and shared conception of what the Commission’s value added was or should have been with respect to PSD [private sector development] support.” It further states that, even if there is a broad consensus on the importance of the private sector for job creation, “linkages between the EU support for PSD and employment generation remained very distant”. Moreover, other findings highlight that “the lack of available information leads to a series of questions regarding the mechanisms and procedures for participation, monitoring and selection, and the prioritisation of energy efficiency over other financing needs of the SMEs [small and medium-sized enterprises].”

Source: European Network on Debt and Development