A pro-poor private sector development strategy is one that takes into account the heterogeneity of the private sector, acknowledges the importance of the informal sector and seeks to achieve systemic change in markets and in the broader enabling environment through the cooperation of public and private actors.

This policy brief looks at the two key challenges for a pro-poor private sector development strategy: the creation of decent jobs and the promotion of (formal and informal) micro, small and medium enterprises with the potential for growth and transformation. These two are complementary actions that should be pursued through a combination of specific programmes and actions supported by economic and social policies and legislative reforms.

Evidence suggests that there is no single set of interventions that will always work, or one that will always guarantee a larger impact on poverty. Rather, it is the combination of different interventions in a broader context-specific strategy to make the development of the private sector pro-poor that will be more effective. Ensuring economic growth is accompanied by poverty reduction and improvement of poverty dynamics therefore requires countries designing national strategies for pro-poor private sector development, tailored to the characteristics of their (poor and non-poor, formal and informal) private actors.