Impact Assessment

Evaluation of the European Union’s Support to Private Sector Development in Third Countries, ADE, 2013

    This evaluation was commissioned by the Evaluation Unit in the Directorate General Development and Cooperation on behalf of the European Commission. It assesses European Union support to private sector development (PSD) during the period 2004 - 2010, where a total of €2.4bn of funds was directly contracted by the Commission. It aims at providing an overall independent assessment of the EU ’s past and current cooperation for PSD and at identifying key lessons with a view to improving its strategies and programmes.

    Methods for info gathering
    The evaluation applied a rigorous methodology with a view to reaching useful conclusions and recommendations based on sound analysis. It designed a four-phase approach consisting of structuring, desk, field and synthesis phases.

    Summary of results
    Over the 2004 - 2010 period, the EU developed a wide set of support mechanisms for intervening in PSD, allocated substantial amounts of funding to the sector, and provided aid across a wide range of PSD - related matters, and in numerous countries with which it cooperated.

    These efforts led to a number of successes, for instance in terms of EU contributions to iinstitutional and regulatory reforms. The EU’s support for PSD was furthermore considered particularly relevant and successful in a number of middle-income countries. It also possessed specific types of potential, though not fully realised, value-added, notably through (i) its ability to provide grant resources for blending mechanisms, (ii) providing PSD support in the context of trade negotiations based on its EU mandate for trade matters, and (iii) its ability to transfer EU know-how and innovative practices.

    Results remained uneven, however, and the evaluation identifies several factors that have played a role in this respect. There were few strong initial needs diagnoses, an essential tool for adequately gearing support. EU support was also not always embedded in strategies geared to the maximisation of the impact of PSD support through appropriate prioritisation and sequencing, building on the value added of the EU and other contributors aiming at maximising synergies with support provided through different EU mechanisms or other actors. The EU overall delivery model of supporting the private sector through the public sector was also not conducive to optimal delivery of its aid. A number of opportunities were furthermore missed, notably in terms of ensuring that the PSD expertise existing in different EU internal market DGs was made available for PSD support in third countries, or in terms of capitalising on the knowledge acquired by EU Delegations in this field. Finally, despite the financial weight and the breadth of its support, the EU was not recognised as a major contributor to PSD.

    Since 2004 the EU has thus made useful contributions to the development of the private sector in third countries, but weaknesses remained in terms of results obtained. These can to a large extent be explained by difficulties in terms of management for results and a lack of strategic approach at country level. That said, the EU continues to have a great potential for PSD support that was not fully activated over the period covered, but should give clear leads for the future.