Private sector is an indispensable force behind generating sustained economic growth that delivers jobs and prosperity to societies everywhere. But its importance is special in post-conflict context where physical, institutional, and social infrastructure has been damaged beyond the capacity of any single government or international donor to restore. Therefore, empowering local business communities in post-conflict countries must be a key element of reconstruction strategy.
Defining the private sector should go beyond a handful of prominent local companies. Any country’s business community includes also small- and medium-sized enterprises, women- and minority-owned firms, and informal entrepreneurs. This broader definition implies that empowering the private sector in post-conflict environments must go beyond simply channeling donor funds to select local companies in a form of sub-contracts or grants. While helping out individual firms is certainly important and needed in the post-conflict reality, it doesn’t necessarily create the basis for sustained growth and development when donor funds dry up.
Long-term sustainability can only be achieved if local businesses of all sizes become stakeholders in reconstruction and are given a voice in shaping their country’s legal and regulatory environment to help make it more conducive to business. That is why supporting the development of independent business associations and chambers of commerce and establishing proper channels for public-private dialogue is as important as investing in businesses themselves. USAID’s draft “Guide to Economic Growth in Post-Conflict Countries” recognizes that beneficial systemic role that business can play in reconstruction:
The development of public-private-sector dialogue is critical. It is important both in the immediate post-conflict period and in longer-term efforts to promote economic growth. (…) These partnerships serve a number of purposes: 1) they help establish a private-sector constituency for policy reforms, which will continue long after donor support has ended; 2) they can work with donors to build local capacity for training, advocacy, and other business development services; and 3) they can offer an effective channel for providing direct assistance to certain enterprises or types of enterprises.
After all, who knows better what the needs and concerns of a local business community are than the members of that community? Giving entrepreneurs who might have been previously overlooked a voice in the public arena is crucial not just from an economic standpoint, but from the perspective of building democratic governance. Providing outlets for policy debate not only creates a platform for crafting better policies, but can also go a long way in preventing conflicts from reoccurring. Research shows that 40 percent of post-conflict countries return to violence within a decade. Making both the business environment and the policymaking sphere of post-conflict countries more open and inclusive is paramount to lowering that disturbingly high failure rate.
Published Date: November 13, 2008