Business in development

Review

Businesses are playing an increasing role in development and the Department for International Development’s (DFID) growing portfolio of work with and through businesses recognises this opportunity. DFID should do more, however, to translate its high-level ambitions into detailed operational plans clearly focussed on poverty reduction. As a result of our findings, we have given a rating of amber-red and made five recommendations.

Findings

Our report found that DFID’s work with business is relevant to its mandate and has expanded its capacity to deliver programmes and to test new approaches. We have observed some strong examples of delivery through loans, equity investments and guarantees and while, in many cases, it is too early to show real impact, our interim evidence suggests that there is scope for significant potential.

We are concerned about the level of strategic oversight DFID has over business engagement activities and the lack of clear targets for this portfolio. Our findings show that DFID needs to do more to translate its high level ambition into detailed operational plans with a clear focus on poverty reduction.

We examined DFID’s work with business at an early stage. They have clearly stated their intention to work more with business and there are great potential benefits for the poor from this collaboration. We are concerned, however, about how DFID will translate these goals into practical actions without more strategic oversight of business engagement activities and without concrete targets. Our recommendations address these issues and, if taken forward, we expect to see increased benefit for people living in poverty.

Recommendations

1. DFID should translate its high level strategies for business engagement into detailed operational plans which provide specific guidance on business engagement with a focus on the poor.
2. DFID should ensure better linkages between centrally-managed programmes and country offices for business in development, including Loans, Equities and Guarantees (LEG).
3. DFID should pull together, synthesise and disseminate management information across all departments, including for LEG, to improve management and ensure learning is captured and used to improve performance.
4. DFID should add suitably experienced members to its Investment Committee to enable sufficient strategic oversight of all components of its LEG portfolio.
5. DFID should reassess how it appraises, monitors and evaluates its engagements with business to ensure fitness for purpose and a sharper focus on the poor.