The private sector is an inextricable stakeholder in driving and sustaining outcomes capable of moving countries beyond the need for assistance. Today, the private sector is playing an unprecedented role in creating and shaping opportunities that improve the lives of the people and communities USAID supports. Private sources now represent nearly 90 percent of financial flows to developing countries.a The private sector creates nine out of ten jobs in the developing world, and provides an important pathway to self-reliance.b It is the driving force behind new innovations that solve problems. It brings expertise to building local markets that match local savings with investment opportunities, and provide countries with the tools to finance their own development. The private sector has the scale and resources to match the complexity of challenges countries face on their Journey to Self-Reliance.

Changes in the global development context have increased the alignment of interests between the private sector and development actors. On their own, donor agencies are unable to fulfill their goals for sustainable development. There is growing recognition within the private sector of the need for, and benefits of, investing in the developing world. At the same time, governments are expanding efforts to diversify their economies and connect with capital for investment. In addition, the increasing scale, length, and frequency of disasters and conflicts around the world means that humanitarian actors alone can no longer address the complex needs of crisisaffected people. The confluence of these trends provides a watershed opportunity for USAID, our partner governments, and civil society to increase collaboration with the private sector to support countries on their Journey to Self-Reliance. To capitalize fully on this opportunity and reach our goal— ending the need for assistance—it is imperative that USAID increase and deepen our collaboration with the private sector. Thus, this policy is an Agency-wide call to action, and a mandate to work hand-in-hand with the private sector to design and deliver our development and humanitarian programs across all sectors, and to harness our resources to open markets and provide opportunities for U.S. businesses.

This policy is a first step within a larger cultural and operational transformation to expand our engagement with the private sector to achieve outcomes of shared interest Agency-wide. The purpose of the policy is to accomplish the following:

  • Set forth the vision and operating principles that will guide and advance USAID’s engagement with the private sector, with an emphasis on promoting U.S. economic growth;
  • Illustrate ways USAID can consistently and comprehensively integrate private-sector engagement into the Agency’s operating model and programming across sectors; and
  • Clarify and harmonize concepts, terminology, and definitions.

Through this policy, we begin the process of institutionalizing private-sector engagement as a core tenet of USAID’s operating model. The Agency’s larger Transformation efforts, which include a new leadership philosophy for the Agency, partnering and procurement reforms, skill-building and talent-management, adapting and addressing performance incentives, evidence and learning, and other issues, will support the implementation of the policy. This policy is part of USAID’s overall Policy Framework, which articulates overarching policy goals for achieving our mission and guides the Agency’s policy, strategy, and programming.

Successful implementation of this policy will result in an increase and deepening of our collaboration with the private sector in addressing the challenges countries face on the Journey to Self-Reliance; an embrace of market-based solutions, and support for market systems across sectors; expanded opportunities for American firms; and consistent leveraging of the private sector’s expertise, resources, and investment in addressing development challenges. In humanitarian contexts, its implementation will result in working with private-sector partners to drive increasingly effective humanitarian responses that incorporate innovative practices and systems to complement existing capacities during all phases of responding to disasters and crises.

Private Sector Engagement