The developmental impact of private sector investments in East-Africa: A bottom up assessment of intended and unintended effects

Abstract

In recent years, development cooperation has moved from traditional development assistance towards an ‘aid and trade’ agenda with businesses becoming important agents of change within development. Despite the widespread adoption of these new policies, there is little empirical evidence about the developmental impact of private sector activities in developing country contexts, including unintended effects of the interventions at the local level. To the extent that attention is given to the developmental impacts, reference is usually made of the employment and/or income impacts for directly affected communities which are often presented as closed containers (Zoomers and Otsuki 2017), without taking into account the impacts for bypassed groups or the extra-local effects. Outcomes, intended and unintended effects whether positive or negative, are not limited to local groups - but are renegotiated through social interactions between all those involved. In this paper, based on field research carried out between 2015 and 2016 in Kenya, Uganda, Ethiopia and Tanzania (conducted by Shared Value Foundation and Kirigia et al. 2016), we aim to gain a better understanding of the developmental impact of private investment by focusing on different types of investments: focusing on Dutch business interventions in the field of horticulture and technology, we realized a bottom up assessment of intended and unintended development impacts. We argue that for private sector interventions and investments to have a positive impact on development, we need to understand the complexity and the variety of effects the private sector has on local realities. Based on surveys, interviews and focus group discussions, we show that in order to optimize the developmental impact of business interventions more attention should be given to assisting local groups to deal with risks and opportunities. The success or limitations of private business to contribute to local development cannot be explained in simple terms of linear causalities or attribution. In assessing the risks and opportunities of private sector interventions we recommend to (1) take the local context as a starting point, (2) analyse local development impact by assessing changes in livelihoods and associated risks and opportunities, (3) and foster long-term engagement in stakeholder platforms.