USAID and the Private Sector: Building Better Relationships for Greater Development Impact

Henry Ford once said, “Coming together is a beginning; keeping together is progress; working together is success,” when describing marriage. But perhaps his insights go beyond wedded bliss. At USAID, we keep asking ourselves, how can we best work together with our partners - particularly those in the private sector – to achieve development impact?

USAID has a long history of working with the private sector, which is a critical piece of our mission: we partner to end extreme poverty and promote resilient, democratic societies. Since 2001, the Agency has built more than 1,600 partnerships with the private sector with more than 3,500 unique partner organizations. We know businesses are well positioned to help drive development. With skilled human resources, sophisticated technologies, large resources, access to markets and global reach, they can drive sustainable development and poverty reduction by creating jobs, transferring knowledge and working alongside governments and civil society.

We work with the private sector to strengthen business enabling environments in developing countries; address barriers and attract private capital that supports inclusive growth; catalyse entrepreneurship and impact investing; and engage the voice of business in policy dialogues around the world. And through all of this, we’ve come to realise something important: relationships matter.

Open communication, trust, common goals and objectives all contribute to the successful unions that Henry Ford imagines and the cross sector partnerships needed to achieve our goals. At USAID, we have increased our focus on relationship health and management, to establish trust and communication with our partners, engage more strategically and look to the future. We recently conducted a study that suggests improving relationships with private sector partners can also improve performance and development impact, which is our ultimate goal.

So, we have taken steps to prioritise these relationships, to make us easier to work with and improve our ability to bring the right opportunities to business and respond quickly to new opportunities.

1. We are conducting research to identify, share and adopt best practices in private sector engagement and relationship health both at USAID and in development, more broadly. We are looking at how public-private partnerships contribute to the sustainability of our programs and internally, we have conducted an internal review of how we work with the private sector, the challenges we face and what’s next on the horizon - all to better understand the value of partnering and how we can make it easier for others to engage with us.
2. We have built an internal network of relationship managers that serve as liaisons or points of contact for some of our key corporate partners, to strengthen our ability to collaborate strategically and improve our communication and coordination across the Agency. These relationship managers make up an important, internal community of practice that regularly comes together to reflect on what works well, where there is untapped potential for collaboration and how we improve and evolve our approach to relationship management.
3. We prioritize shared value partnerships and co-creation with private sector partners. Through mechanisms like the Global Development Alliance and our Broad Agency Announcement, we seek market-based approaches that are built at the intersection of business interests and USAID development objectives.

And we have learned a great deal about our relationships and how to strengthen them.

1. Companies consistently cite trust and strategic alignment as critical to successful collaboration – with the biggest and best partnerships coming from trusted entities willing to brainstorm together.
2. Prioritising relationship health and management has driven a shift in our engagements with companies, from one-off projects to more systematic collaboration with better coordination and communication with our corporate partners.
3. Companies see relationship managers as problem-solvers working with them to address challenges, set expectations and keep things moving. Knowledgeable and consistent liaisons, who know and understand a company and can identify where their business interests align with our development objectives add value to the relationship.

So what’s next, and how do we continue to build on the progress we have already made? We know that the private sector will continue to play an increasingly critical role in not only driving economic growth, but also determining how resilient, inclusive and environmentally sustainable that growth will be. Today, private sector financial flows vastly exceed Official Development Assistance (ODA): 91 per cent of resources flowing from the U.S. to developing countries come from private resources like private investment, remittances and philanthropy.  And the donor community must continue to evolve our role, beyond that of funder to convener, facilitator, risk mitigator and more.

And as we strengthen our relationships with the private sector, we must continue to ask ourselves: how can we be catalytic and unleash the power of business and markets to advance social and economic development? What can we do to remove barriers and enable companies to do what they do best - make sound and responsible investments, create jobs, and spur economic growth? And what can we do, given our unique positioning, to bring diverse stakeholders together to solve complex problems?

By asking these questions of ourselves and our private sector counterparts, we can not only come together across sectors but work together more effectively and strategically to achieve greater development impact.

This blog is part of the January 2017 series on how, and why, donors and businesses work together for development impact. For more candid opinions on what works, and what doesn't, read the full series on demystifying donor-business collaborations.