Defining the PSE Relationship

If recent messaging has you thinking "I better bone up on private sector engagement quick...", but you really just want to curl up in the corner and watch old rom com movies to escape, this may be for you.

Sooner or later, in every PSE journey, someone will start talking about how it is similar to a dating relationship. Given that, I'll try to Define the Relationship for PSE, through old rom com quotes.

"You Complete Me." (Jerry Maguire)

Private sector engagement (PSE) is a hot topic in development circles, with donors and foundations leveraging it to amplify their impact. Ultimately, any kind of partnership only makes sense if it leads to better results than working alone. Given recent comments by Marco Rubio, for USAID this could be initiatives that make the United States "stronger", "safer" or "more prosperous". For development practitioners, that can still link to your impact goals. And if your goals, and Rubio's stated direction align with private sector needs, there is room to work together. If working with partners completes your vision, then it is a match.

"I’m just a girl, standing in front of a boy, asking him to love her." – Notting Hill

PSE is about crafting market-based solutions to development challenges. Some donors focus solely on private sector funding, but the most effective PSE efforts create opportunities that go beyond financial contributions to find solutions that leverage private sector expertise. The ultimate goal for many PSE practitioners is to enable the donor to eventually exit. While PSE does not suit every challenge, if the market can offer a solution, it's worth exploring. PSE is really about seeing the central purpose of the partner, and leveraging it.

"I’ll Have What She’s Having." (When Harry Met Sally)

PSE thrives on shared resources. When partners recognize that collaboration strengthens the solution, they embrace the idea that no single entity has all the answers. Contributions don’t have to be just financial—strong partnerships blend diverse resources, whether from donors or private sector actors. Here are some ways to engage:

Partners can bring so much more than financial support.

A great example of this is when academic research institutions develop a new technology or make a scientific discovery, and then a partner company works with a donor to bring that technology to market. This can happen organically, or you can bring these actors together early to intentionally design a solution that meets your impact needs. Either way, looking at "what they are having", and see where it leads.

“I wanted it to be you. I wanted it to be you so badly.” (You've Got Mail)

All private sector engagement is co-creation, but not all co-creation is private sector engagement. PSE is as simple as it sounds-it is focused on working with the private sector to solve challenges. If you need to solve challenges that require partners beyond the private sector, that just means you are co-creating beyond PSE. But if you have a private sector partner that you are engaging with, you are doing PSE.

Co-creation, on the other hand, is not a specific approach limited to using certain tactics with specific partner types. As I write this, my young child is co-creating a story with his friend in his room. He isn't using a specific approach, but he is definitely co-creating. If you have 2 people in a room, trying to develop a solution together, that is all you need for co-creation. That is not to say there isn't an entire toolbox of approaches you can use for co-creation--there is, and I will get into that in the future. But given how broad co-creation is, private sector engagement is a subset of it. 

"Nobody Puts Baby in a Corner." (Dirty Dancing)

There is a difference between private sector engagement and private sector development. Grasping this can sometimes be difficult for development practitioners. The main difference is that, ideally, private sector engagement should be a two way street.  Private sector partners bring resources to the table to address a challenge that they want to address because of their own self interest (in the most Economics 101 sense of the term).

DECD says Private Sector Development (PSD) is the range of strategies aiming to establish markets that function vibrantly and fairly, providing economic opportunities of quality to poor people at scale. PSD and PSE can interact, but the major difference between the two is that PSD is actively trying to create economic growth, whereas PSE is looking for overlap between a private sector partner and the development agency that both partners can collaborate on. Both of these concepts have value, and don't need to be put in a corner, and certainly not the same corner.

"You’re My Best Friend." (My Best Friend’s Wedding)

In development, PSE often requires the donor or NGO to approach activity design differently. In traditional activity design, the donor/funder can take a top down approach to activity design, because they control the resources. Although this leads to more efficient design, it also does not take advantage of the skills and knowledge that the private sector partner may bring to the table. Like any potential partner, the private sector actor is also going to be looking for ways to achieve their objectives as well, and that two way exchange in design is critical to make that relationship work over the long haul.

"As You Wish." (The Princess Bride)

Private sector engagement is not a one-size-fits-all approach. It’s a dynamic process of collaboration, requiring alignment, creativity, and shared value.

• PSE is not just for MNCs - it can be done with any type of company. In fact, some of the most transformative and durable PSE activities have been proven to take place with local companies. There is a different approach to "local" PSE versus engaging large multinationals, because their needs are often different, and their internal structures require different engagement.

• PSE looks different in different economies. In countries where the economy is smaller, or the business environment is not as encouraging, PSE practitioners need to focus on different ways to engage.  The way you co-create can be really important here.

What’s your experience with PSE? Have you faced challenges or seen creative solutions in action? Let us know in the comments!