Improved Guidance, Data, and Metrics Would Help Optimize USAID’s Private Sector Engagement

Engagement with the private sector is a major component of USAID’s efforts to encourage country self-reliance. According to the Agency, over the last 20 years it has entered into thousands of partnerships with private sector organizations involving billions of dollars in contributions. Based on examined partnerships in eight countries, we identified six engagement approaches that USAID generally used in an effort to boost private sector investment in foreign development. To support and manage its financial and nonfinancial resources when using one or more of these approaches, USAID employed a variety of formal and informal methods. Regardless of the approach and methods used, USAID and the private sector cited a number of benefits from partnering on foreign development, including bringing development interventions to a larger scale to achieve greater impacts. However, USAID and private sector stakeholders, as well as implementers, reported a number of challenges that can limit successful engagement and partnering on development projects. In addition to these challenges, insufficient Agency-wide implementation guidance and insufficient data and metrics have hindered missions’ ability to design, manage, and oversee private sector engagement and maximize engagement, as USAID’s private sector engagement policy calls for. We made, and USAID agreed with, seven recommendations aimed at helping the Agency maximize private sector engagement and its impact.